Supermicro co-founder pleads not guilty to $2.5 billion China chip smuggling charges

Supermicro co-founder pleads not guilty to smuggling billions of dollars of Nvidia servers to China -- suspected smuggler released on $5 million bond

Super Micro Computer co-founder Yih-Shyan "Wally" Liaw pleaded not guilty on Wednesday in a Manhattan federal court to charges that he helped illegally divert billions of dollars' worth of Nvidia-powered servers to China, Bloomberg reported. Co-defendant Ting-Wei "Willy" Sun, an outside contractor described by prosecutors as a "fixer" in the smuggling scheme, also entered a not-guilty plea at the hearing before U.S. District Judge Edgardo Ramos. Liaw has been released on a $5 million bond, while Sun's lawyer told the judge that he's negotiating a bail package with prosecutors. The third defendant, Ruei-Tsang "Steven" Chang, a former general manager in Super Micro's Taiwan office, is not in U.S. custody. Judge Ramos set a November 2 trial date for the case. Federal prosecutors allege that Liaw, Chang, and Sun conspired to sell U.S.-assembled servers containing Nvidia's export-controlled AI chips to Chinese customers through an unidentified Southeast Asian pass-through company. The case is the highest-profile prosecution yet in the U.S. government's crackdown on the alleged smuggling of restricted AI chips to China. The scheme reportedly involved swapping serial number stickers from real servers onto non-functioning dummy units using heat guns, then shipping the genuine hardware onward to China with fabricated paperwork. CCTV footage captured workers using heat guns to swap the serial numbers at a Southeast Asian warehouse. Prosecutors estimate the operation generated roughly $2.5 billion in sales since 2024, with shipments between April and May 2025 alone being valued at over $500 million. The charges, unsealed on March 19, immediately hammered Super Micro's stock price, erasing more than $6 billion from the company's market cap, with the stock falling roughly 33% in a single session. Liaw has since resigned from Super Micro's board of directors. Super Micro itself isn't named as a defendant in the indictment, but acknowledged that the three accused individuals are "associated" with the company in an official statement. The server maker called the alleged conduct a violation of its internal policies and said it maintains a compliance program covering U.S. export and re-export control laws. Nvidia also distanced itself from the scheme, telling Tom's Hardware that strict compliance is a priority and that it does not provide service or support for unlawfully diverted systems. U.S. Senators Jim Banks and Elizabeth Warren wrote to Commerce Secretary Howard Lutnick, urging a pause on all active export licenses for advanced Nvidia AI chips headed to China and Southeast Asian intermediaries. Shareholders have also filed a securities fraud lawsuit against Super Micro, alleging the company concealed its dependence on revenue from illicit sales. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Supermicro investigating alleged China chip smuggling

Board-led inquiry follows indictment of two employees and a contractor over alleged diversion of Nvidia GPU servers Supermicro has launched an independent investigation after three people associated with the company were charged with violating US export restrictions on China. The server maker confirmed the probe is underway regarding the indictment last month of two employees - one a co-founder of the company - and a contractor for diverting AI servers with Nvidia GPUs to Chinese customers. Supermicro itself is not accused of playing any part in the incident, and says it is cooperating fully with the criminal investigation. The company said it was informed of the alleged wrongdoing on March 19 after two of the defendants were arrested. The internal inquiry is being led by two independent board members, Scott Angel, lead independent director, and Tally Liu, chair of the board's audit committee. According to Supermicro, Angel spent nearly four decades in Deloitte's audit and assurance practice, while Liu racked up 25 years' experience as a certified public accountant. The pair have also retained outside firms to assist, including lawyer Munger, Tolles & Olson, consultancy AlixPartners, and Supermicro's auditor, BDO USA. At the same time, a separate internal review of Supermicro's Global Trade Compliance Program is being carried out as the alleged illicit activity by the defendants was not detected by the company. No timetable has been set for the investigation, and Supermicro said it will provide an update only when it is complete. Meanwhile, Bain Capital's server farm subsidiary, Bridge Data Centres, has reportedly cut ties with an Asian partner following a US government probe into whether Nvidia products were smuggled to China in violation of export restrictions, according to Bloomberg. However, the company in question, Megaspeed, posted a rebuttal on its website, saying US authorities found no evidence of violations involving the illicit transfer of chips or other illegal activity, and that it operates fully within the bounds of all applicable export control regulations. Megaspeed said it may pursue legal action against Bloomberg over what it calls the "misleading nature of the article." Back in Washington, a bipartisan group of lawmakers wants to impose further restrictions on exports of chipmaking equipment to curb China's ability to produce its own advanced AI silicon. The Multilateral Alignment of Technology Controls on Hardware (MATCH) Act aims to "strengthen US national security by closing critical gaps in export controls on semiconductor manufacturing equipment (SME)." Among its provisions are bans on sales of SME to destinations in any "country of concern," including Deep Ultraviolet (DUV) immersion lithography systems and cryogenic etch tools used for advanced and legacy chips. The move could be further bad news for Dutch tech giant ASML, which has already faced years of US-imposed restrictions on the chipmaking kit it can sell to China, one of its biggest markets. However, ASML stated last year that it expected Chinese demand for its products to decline as Beijing doubles down on home-grown alternatives in response to ongoing export restrictions. ®

Super Micro Co-Founder Pleads Not Guilty in China Smuggling Case

Super Micro Computer Inc. co-founder Yih-Shyan "Wally" Liaw pleaded not guilty Wednesday in New York to charges that he helped illegally divert billions of dollars in Nvidia Corp.-powered servers to China in a hearing in Manhattan. Liaw was charged by federal prosecutors in a scheme to send US-assembled servers containing Nvidia's cutting-edge chips to Chinese customers in violation of US export controls. The case represents the highest-profile crackdown on alleged smuggling of restricted AI technology to China. The US claims Liaw and two others associated with Super Micro sold the hardware to an unidentified Southeast Asian pass-through company and coordinated its shipment to the true customers in China. Also charged were Ruei-Tsang "Steven" Chang, who served as a general manager in Super Micro's Taiwan office, and Ting-Wei "Willy" Sun, an outside contractor described by US authorities as a "fixer" who allegedly aided in the diversion. Sun, wearing a bright yellow prison jumpsuit, also pleaded not guilty in the hearing before US District Judge Edgardo Ramos. Sun's lawyer told the judge he is working with prosecutors on a bail package for his client. Liaw is free on $5 million bond. Chang is not in custody. The smuggling charges sent Super Micro plummeting when they were made public on March 19, quickly erasing more than $6 billion from the company's market value. Liaw has resigned from the boardBloomberg Terminal. Ramos set a Nov. 2 trial in the case. The case is US v. Liaw, 26-cr-00100, US District Court, Southern District of New York (Manhattan).

Super Micro begins independent probe after criminal case against co‑founder, others

April 7 (Reuters) - Super Micro (SMCI.O), opens new tab said on Tuesday it had begun an independent investigation into the indictment of three people linked to the company on the charges of committing export-control violations. The San Jose, California-based company has also launched an internal review of its global trade compliance program, it said. The U.S. Justice Department last month charged co-founder Yih-Shyan Liaw, sales manager Ruei-Tsang Chang and contractor Ting-Wei Sun with allegedly running a scheme to route U.S.-made servers through Taiwan to Southeast Asia. The products ⁠were allegedly repackaged into unmarked boxes in Southeast Asia and smuggled into China. Super Micro, which was not named as a defendant in the case, had placed Liaw and Chang on leave and terminated Sun after it became aware of the charges. Liaw resigned from the company's board in March following the indictment. The three allegedly moved at least $2.5 billion in U.S. AI technology, including over half a billion dollars' worth shipped between April and mid-May last year, the department ⁠said. Four Chinese universities, including two linked to the People's Liberation Army, bought Super Micro servers with restricted AI chips over the past year, Reuters reported last month, citing procurement data. Chinese universities and research institutes have previously acquired restricted chips in servers made ⁠by Super Micro and other manufacturers, Reuters reporting from 2024 shows. Super Micro said the investigation was being led by two independent board members -- Lead Independent Director Scott Angel and ⁠Audit Committee Chair Tally Liu. The findings would be reported to the board's remaining independent directors, who have retained law firm Munger, Tolles & Olson to ⁠lead the investigation. Consulting firm AlixPartners has been engaged to provide forensic accounting expertise. The independent directors have not set a timetable for completing the investigation. Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shreya Biswas Our Standards: The Thomson Reuters Trust Principles., opens new tab

Super Micro's Liaw pleads not guilty to chip smuggling charges By Investing.com

Investing.com -- Super Micro Computer Inc. co-founder Yih-Shyan "Wally" Liaw pleaded not guilty Wednesday to charges of illegally diverting billions of dollars in Nvidia Corp.-powered servers to China during a hearing in Manhattan. Federal prosecutors charged Liaw in a scheme to send US-assembled servers containing Nvidia's chips to Chinese customers in violation of US export controls. The case marks the highest-profile crackdown on alleged smuggling of restricted AI technology to China. Prosecutors claim Liaw and two others associated with Super Micro sold the hardware to an unidentified Southeast Asian pass-through company and coordinated its shipment to customers in China. Also charged were Ruei-Tsang "Steven" Chang, a general manager in Super Micro's Taiwan office, and Ting-Wei "Willy" Sun, an outside contractor described by authorities as a "fixer" who allegedly aided in the diversion. Sun also pleaded not guilty in the hearing before US District Judge Edgardo Ramos. Sun's lawyer said he is working with prosecutors on a bail package for his client. Liaw is free on $5 million bond. Chang is not in custody. Ramos set a November 2 trial in the case. The smuggling charges sent Super Micro shares plummeting when they were made public on March 19. Liaw has resigned from the board. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.